Kraken Awarded $1.5 M From Major Defence Contractor

Kraken Sonar Inc. ("Kraken") (TSX VENTURE: PNG) is pleased to announce that its wholly-owned subsidiary, Kraken Sonar Systems Inc. has received a $1.5 million contract from a major international defence contractor for a KATFISH sonar system. Along with spare parts and support, the initial order could exceed $2 million. Due to the sensitivity of its business, the client's name cannot be disclosed.

The agreement includes multiple stages, starting with a first phase for the manufacture and supply of Kraken's KATFISH system. The customer will make an advance payment on the contract in 2015. Approximately 75% of the contract revenue is expected be realized in 2016. Subject to contract options, the next phases will position Kraken as a primary sonar supplier to the Unmanned Maritime Systems (UMS) market.

Karl Kenny, President and CEO of Kraken said, "This is a very significant award for us and demonstrates that KATFISH is a key objective in delivering on our "sensors-to-systems" strategy. This contract further establishes Kraken's underwater technologies in the Unmanned Maritime Systems industry and positions us for future contracts on UMS platforms."

Conventional side scan systems are limited in that they only provide high resolution imagery at short range. KATFISH produces ultra-high resolution seabed imagery with constant resolution to very long range. The additional information provided by the KATFISH system delivers a detection and classification capability that cannot be achieved with a conventional sidescan sonar. The entire system is designed to be quickly installed and removed from craft of opportunity platforms and is packaged for easy transportation.

Kraken's Katfish Addresses a Naval Warfare Inflection
The future of naval warfare continues to evolve toward smaller vessels, littoral operations and underwater intelligence, surveillance and reconnaissance missions. Advanced sonar technologies, such as the SAS produced by Kraken, have matured to support solutions that can economically survey and detect small objects hidden on the seabed and can enter into confined spaces where underwater explosives are likely to be hidden.

The underwater defence market is evolving rapidly; responding to changing threats, tensions in the Middle East and Asia, economic and budgetary pressures and a growing eagerness by modern navies and developing countries alike to procure and deploy ocean drones such as UUVs and USVs.

UUVs are a proven technology that have been used for many years, mostly for mine countermeasures, oceanographic research and oil & gas surveys. In contrast, USVs, the naval equivalent of unmanned aerial vehicles (air drones) have not been widely used. While the technology for USVs is in its infancy compared with the aerial drones, this situation is about to significantly change.

Unmanned vessels, like unmanned aerial vehicles, provide military forces with reach and capability without the risk of manned systems. They keep the dull, dirty and dangerous jobs away from human personnel.

USV technology is maturing rapidly, and a number of USVs are market-ready, signaling a coming sea change in the makeup of the overall Unmanned Maritime Systems (UMS) market.